Archives for July 2017

It’s been a few days since my wife set up her StashAway Singapore robo-advisor account. As I have mentioned previously, we went with a very aggressive General Investing portfolio. It has a 69% growth ETFs vs 31% protective ETFs split. These ETFs are listed on the New York Stock Exchange (NYSE), which is why any SGD funds that we transfer into the account has to be converted to USD before being used to purchase the ETFs.

I like the USD currency diversification since I don’t like the fact that most of our investment holdings continue to be in SGD. Anyway, it takes about 3 days for the SGD funds to be converted to USD and used to buy the ETFs according to the portfolio allocation percentages. It has a good mix of ETFs to the point where we consider the account to be a standalone portfolio on it’s own. Meaning we don’t have to integrate it with the rest of our assets and worry about how all of the allocations are changing.

We just have to keep transferring funds into the account to grow it with minimal monitoring. A good way to soak up our excess liquidity since we have a tendency to let our cash idle due to us not monitoring the markets sufficiently to identify buying opportunities. After the one-time funds transfer of S$100 into the account, we decided it was time to set up regular funds transfer as well. Specifically 4 x monthly transfer of S$100 each. Picking the four dates was just a case of spreading them out within a month. We went with 1st, 8th, 15th and 25th of every month, meaning the next transfer is 25 July 2017 and the ones after that are on 1 August 2017, 8 August 2017 and 15 August 2017 before repeating themselves.

We are likely to take a similar approach when I set up my Smartly Singapore robo-advisor account. A one-time funds transfer of S$100 followed by regular 2 x monthly transfer of S$100 each. We might go with 4th and 11th of every month, just to vary the dates a little. My monthly funds transfer is less than my wife since we plan to build her account up at a faster rate than mine. This means our monthly automatic investment amount will increase from S$1,900 to S$2,500 once everything is up and running. Which is suitable for a bull market environment we are in now. It should rise further in a bear market environment as we adjust the amount upward to take advantage of market dips and crashes.

Even though we have been together for a number of years, our philosophy is not to combine our finances until we have kids. We should pull our own weight and not rely on each other financially. This hasn’t changed after we got married. Bank accounts and investments remain separate. We are also responsible for managing our own careers, income and expenses. We rely on each other for emotional support but the above approach has ensured we grew up into independent and financially responsible adults. If we have kids, we might start to combine our finances but we are likely to be in a stronger financial position by then. This is why we put in a lot of effort to grow both our savings and investments separately but still ensure it’s a common strategy that works for the both of us.

Let’s have a look at the growth and protective NYSE-listed ETFs in my wife’s StashAway Singapore robe-advisor account:

Technology Select Sector SPDR ETF (XLK)

SPDR Bloomberg Barclays Convertible Securities ETF (CWB)

iShares MSCI All Country Asia ex Japan ETF(AAXJ)

Consumer Staples Select Sector SPDR ETF (XLP)

Consumer Discretionary Select Sector SPDR ETF (XLY)

iShares TIPS Bond ETF (TIP)

iShares 20+ Year Treasury Bond ETF (TLT)

SPDR Gold Shares (GLD)

I won’t reveal the percentage allocations of these ETFs but would say that the 69% growth vs 31% protective split results in a higher percentage of growth ETFs in my wife’s portfolio. After taking a quick look at the holdings of the ETFs, we like how little they are overlapping with our existing ETFs holdings. The rebalancing and re-optimisation features of the portfolio are useful in automatic management of the asset allocations without any manual interventions. This is critical given our long-term investment horizon.

I might include our robo-advisor portfolio values on the blog so you can monitor their performance. Not sure whether there’s an easy way to import the data into the blog. Maybe I will just cut out a relevant snippet of the account online and paste it as a picture. Or I will write in the end of month values and manually track the growth. Still undecided for now but should have something ready after the end of this month. Let me know what works better for you too as the reader.

Things have been quiet lately on my blog because there hasn’t been any major updates. I have recovered from my recent bout of illness, which took longer than I thought and was not a pleasant experience. I’m trying to make changes to our living habits by sleeping, resting, exercising more and improving our diets by eating healthier and home-cooked food. Let’s hope this pays off and I recover faster the next time.

Anyway, it’s time for some exciting news. My wife received the sign-up notification email from StashAway Singapore that she can now set up her robo-advisor account with them. The main reason for my wife going with StashAway Singapore instead of Smartly Singapore is due to the lower fees as the investment amounts increase to significant levels. We should be building up her robo-advisor account more quickly than mine since most of our current Monthly Investment Plans (MIPs) are using my bank accounts. Hence, it’s critical that the fees she pay are lower for large investment amounts.

I know the portfolio/asset allocation framework is different between StashAway Singapore and Smartly Singapore. Since we can’t accurately compare the returns from these different portfolio/asset allocation frameworks at this stage, we have to go with the pricing structure as the main point of consideration. After all, the plan is for my wife to go with one robo-advisor (StashAway Singapore) and for me to go with the other robo-advisor (Smartly Singapore). As we work out which portfolio/asset allocation framework is superior over time or if the pricing structures change, we might amend our funds allocation accordingly.

Since I am still waiting for my sign-up notification email from Smartly Singapore, I might write about my wife’s experience setting up her robo-advisor account with StashAway Singapore. The onboarding process was smooth and we found the additional questions on our income, expenses, net worth and investment aims useful in the goal-setting and risk allocation of the portfolio. For my wife’s account, she went with a very aggressive General Investing portfolio. It has a higher proportion of growth Exchange Traded Funds (ETFs) compared to protective ETFs.

The asset allocations of this very aggressive General Investing portfolio in relation to the various growth and protective ETFs are interesting, especially those listed on the New York Stock Exchange (NYSE). Given that the holdings of our current foreign ETFs listed on the London Stock Exchange (LSE) do not overlap much with that in the robo-advisor account with StashAway Singapore, it’s a good start.

We have taken a conservative approach and only made a one-time funds transfer of S$100 into the account. Just to test out when and how this cash amount is invested. After we gain a better understanding of the logistics, we should commence monthly funds transfers into the account to automate the investment process. Will provide more updates as we get more advanced in our knowledge of the account.

I was unwell this weekend. Started developing a cold and cough on Fri before it got worse on Sat. Feeling better now on Sun after sleeping in for the past 2 days. Going for a more straightforward post about our net worth and passive income for June 2017 since I am still recovering.

Cash and Net Worth

If you looked at my expense blogpage, our cash savings for June 2017 is S$5,467 and the savings rate is 29.99%. It’s our worst performing month for the year. But what isn’t going to make sense is that our net worth went up by S$19,127 (i.e. +8.60%), which is our best performing month of the year. Much of this increase is attributed to our cash holdings rising.

I should explain this anomaly in more detail. Every month, I only add S$5,000 to our cash holdings in the Google Sheet regardless of what our savings rate is. This works because we usually save more than S$5,000 in cash each month and I’m too lazy to add the exact amount to our cash holdings. What happens is that every few months, I will restate the cash holdings figure in the Google Sheet to improve its accuracy.

I did this for June 2017 and our cash holdings in the Google Sheet went up by a lot more than the actual cash savings for the month. There should be a better way to do this but it will require more regular checking and updating of our cash holdings in the Google Sheet. And my preference is to keep it simple with less monitoring required.

Investments, Mortgage and Retirement

Watching our ETF and Stock portfolio go up slowly and mortgage balance go down even more slowly can be frustrating. I know progress takes time and I have to resist the temptation to speed things up by being reckless and taking unnecessary risks. Sometimes, I catch myself wondering whether we should have bought a less expensive apartment so we don’t have such a large mortgage balance. But then I think about all the benefits and advantages we have by living relatively close to my parents-in-law and that feeling of regret goes away. You can’t have everything your way in this world. Win some, lose some.

From my previous post about the drop in our monthly housing loan instalment, you should know we pay S$1,000 of this instalment from our CPF Ordinary Accounts. Given that our combined monthly employer and employee CPF Ordinary Accounts contributions come up to about S$2,600 every month, what happens to the remaining S$1,600? We don’t do anything with it and just leave it as our housing loan Emergency Fund.

We like the flexibility of the CPF and being able to use the Ordinary Account funds for housing is a big plus point. Having a safe, secure and evergrowing housing loan Emergency Fund in the form of the CPF Ordinary Account works well for salaried employees like us. Our CPF Retirement Accounts are also coming along nicely. As long as interest rates on the CPF Ordinary Account and Retirement Account balances can be maintained or even increased, our retirement funds should be sufficient provided we don’t get retrenched.

Dividend and Interest Income

We didn’t receive much dividends for the month of June 2017. Just from the 3 companies below.

Kingsmen Creative (SGX:5MZ) – S$32

Silverlake Axis (SGX:5CP) – S$21

Raffles Medical (SGX:BSL) – S$36

Total dividend income for June 2017 – S$89

Interest income has gone up since we sold a significant portion of our investments and increased our cash holdings. I should highlight that a part of this interest income is spending driven i.e. meeting the minimum spending threshold on our credit cards tied to the high interest bank accounts. Once we start to reduce our spending, it might cause a drop in our interest income. Convoluted stuff I know.

NAB and ANZ AUS bank accounts – S$160

UOB One SG bank accounts – S$200

OCBC 360 SG bank account – S$120

Stan Chart Esaver Promotion SG bank account – S$130

Other bank accounts – S$11

Total interest income for June 2017 – S$621

Average Monthly Passive Income for 2017

This figure is starting to cross S$1,000 earlier in the year and staying above it more consistently. But I expect the progress towards S$1,500 to be slow with my investment portfolio restructuring efforts hindering it. When we eventually start our robe-advisor portfolios with Smartly and StashAway, we might re-invest the dividends/distributions instead of receiving them as cash.

As we continue to focus on ETF investing, whereby the dividend yields are lower, it means that we might not be able to rely purely on the dividend income derived from such an investment portfolio. We would have to draw down on the capital base of our portfolio for this early retirement model to be sustainable. Should have known this was the case as we moved away from dividend stock investing and lowered the dividend yield on our portfolio. Just got to keep learning!